The impact of the EU carbon border adjustment mechanism on China based on the climate club

This study analyzes the EU Carbon Border Adjustment Mechanism (CBAM)’s implications for China’s trade, GDP, and carbon emissions under evolving global climate governance frameworks. Combining climate club theory with recent policies from the U.S., U.K., Japan, and Canada, it proposes a potential multi-climate club coexistence model. Using the GTAP-E model, the research quantifies CBAM’s effects under two scenarios: a single EU-led climate club and a multi-club system. Key findings reveal that while China’s short-term export reductions to the EU remain marginal (<1% across industries), long-term trade diversion intensifies, with 30% of cement exports projected to shift to non-EU markets by 2034. Multi-club cooperation exacerbates GDP growth challenges for China compared to a single-club scenario but amplifies carbon reduction incentives, particularly if CBAM expands to cover indirect emissions. High-energy sectors (e.g., cement, chemicals) emerge as most vulnerable. The study underscores CBAM’s dual role as both a trade barrier and a catalyst for industrial decarbonization. Recommendations emphasize strengthening China’s carbon pricing mechanisms, proactive engagement in multilateral climate negotiations, and targeted support for energy-intensive industries. These insights highlight the urgency of adaptive strategies to reconcile economic resilience with climate obligations amid fragmented global governance.